Dissertation on Critically evaluate the internationalization of Indian SMEs to evaluate the internationalization

Critically evaluate the internationalization of Indian SMEs

Abstract 

The research is proposed to evaluate the internationalization of Indian SMEs and for this, the major focus is on the factors that motivate SMEs to go international and the issues faced by them while expanding globally are investigated. For the research purpose, the research is being conducted in a qualitative manner by conducting secondary data through two case studies. It enables to develop an understanding of the real world and provide more reliable findings. It is found from the research that government support, technology evolution, a decline of demand in the home market, growing concern of quality are the major factors that motivate Indian SMEs to focus on internationalization of their operations. Further, it is found that competition, lack of resources, selection of a partner, less R&D, poor marketing practices, perception for lower quality, ineffective networking are some of the major issues that influence the success of Indian SMEs in their process of internationalization. Although in the present time, exposure through marketing activities is contributing to the overall growth of SMEs at the international level. It is recommended in the study that Indian SMEs should focus on the aggressive marketing strategies along with utilizing digital and internet technologies to improve their communication with potential customers in the international market.

Introduction 

1.1 Research Background 

In the current time, the competition, technology evolution, and globalization are causing an increase in the expansion of businesses beyond national boundaries. The businesses are seeking new opportunities in the international market due to the potential for their growth, market share, revenue, and profitability, which are the major objectives of firms to determine their growth and sustainability (Paul et al, 2017). But at the same time, there are various barriers and issues that affect their overall process of internationalization. Although large firms have enough sources and capabilities to face these barriers and go ahead, at the same time, it creates major issues for SMEs due to the availability of limited resources (He, 2011). In the present time, SMEs are growing significantly in the international market due to their entrepreneurial approach and also the innovation and uniqueness in their products and services.

The research is in the context of Indian SMEs, which are growing significantly and play an important role in the growth of the economy. SMEs in India play a major role in the GDP of the economy and also the development of employment. With the growth of SMEs in the Indian market and growing globalization is also causing an increase in the focus of SMEs towards internationalization of their operations for the purpose of gaining the benefits of larger market and revenue (Bell et al, 2004). But Indian SMEs are perceived as less competitive in compared to their counterparts in the developed economies and due to this, it affects their overall internationalization process. But in current, there is a growing trend of internationalization of Indian SMEs as there are number of countries in which Indian SMEs are growing their operations with the different entry strategies (SME Chamber of India, 2018). Due to this, the research is undertaken for the purpose of exploring the major reasons for growing internationalization of Indian SMEs along with analyzing the major issues that are faced by them in the process of their international expansion. Along with this, the research is also effective to identify the extent to which Indian SMEs are getting success at international market.  

1.2 Research aim and objectives:

The main aim of the thesis is to critically evaluate the internationalization process of SMEs in terms of factors that motivate them to go internationally and the issues faced by them. The below research objectives are achieved through this study to fulfil the research aim:

• To critically evaluate the factors that motivate Indian SMEs to go internationally

• To identify the major issues faced by Indian SMEs while expanding globally 

• To recommend appropriate strategies for successful internationalization of Indian SMEs

1.3 Research Question(s):

The major questions, which are being explored through this research study:

• What are the major factors that motivate Indian SMEs to go international? 

• What are the major issues faced by Indian SMEs in their process of internationalization?  

This question is taken as it is required to analyze in current time where the business environment is changing and the business expansion has become one of the major strategies for the success and sustainability of all types of the businesses. This question will enable to undertake the analysis of current internationalization processes and to identify the major issues faced by Indian SMEs for their internationalisation. 

1.4 Research Rationale 

The undertaken research is quite important in the present time as there is a growing globalisation of SMEs. The business environment is changing and so the challenges and the factors in the internationalisation processes are also changing. Due to this, the research would be effective to develop an understanding of the major factors in the present time that are contributing in the globalisation of Indian SME s along with the issues faced by them in their global expansion process. Along with this, the research would also be effective to provide an understanding of the major factors that are required to be considered by the government to support the growth of SMEs in the international market. The research will provide the results related to the major factors that motivate SMEs for globalisation and the associated issues in their global success from the specific geographical point of view, which is quite less researched yet even after having a larger portion of SMEs.

1.5 Research structure 

The research is structured into five chapters namely introduction (a brief overview of the research problem), literature review (developing a conceptual and theoretical understanding of the research problem), methodology (provides an understanding for the method and approaches used for data collection and analysis), findings and discussion (provide findings and their discussion in the context of research objectives/problem) and conclusion (summarised the findings).

Literature Review 

This chapter is effective to analyse the previous findings in the context of the research problem to determine their conceptual and methodological contribution. This chapter is helpful to conduct an empirical analysis of the previous studies, which improved the understanding the major factors that influence internationalisation process of SMEs and also the major challenges and opportunities that they found from their internationalisation process. Firstly, the chapter includes the major factors behind the increasing internationalisation of SMEs and then the major issues that influence the overall internationalisation process of SMEs.

2.1 Overview of Indian SMEs

Small and medium enterprises (SME) sector in India has emerged as a highly vibrant and dynamic sector, which plays an important role in providing employment opportunities at lower cost in compared to large industry sectors. The major factor for the growth of this sector in India is its contribution in terms of growth of rural and backward areas, the decline in regional imbalance, more equitable distribution of national income and wealth and overall contribution on social-economic development (SME Chamber of India, 2018).

Internationalisation of SMEs

In the context of internationalisation of SMEs, several research studies have been conducted. The research of Bell et al, (2004); Todd and Javalgi (2007) and Crick and Spence (2005) found that the major factor for the internationalization of SMEs is their unique competitiveness and the growth in market access due to the evolution of internet technologies. From this, it can be said that growth in internet technologies and digitalization is making SMEs enter in the international markets easily along with identifying their customer base and it is the major reason for the overall internationalization of them. Although Ruzzier et al, (2006) and Olejnik and Swoboda (2012) depict that entrepreneurial aspects of SMEs along with dynamic capabilities are contributing to gain the demand of them in international markets and due to this, they are expanding their businesses in internationally. The entrepreneurial approach of them is effective to increase value for the customers that make SMEs go internationally for being a large firm. Furthermore, Kalinic and Forza (2012) with the analysis of five SMEs’ case studies analyzed that strategic focus of the SMEs is the major reason for the internationalization of traditional SMEs rather than their knowledge intensity, international network. 

But in oppose of this, a secondary study conducted by He (2011) to investigate the factors influence internationalisation. In this study with a focus on traditional internationalisation theory, it is discussed in the study that the major reason for SMEs’ internationalisation is their intention to develop a firm-specific advantage in the domestic market. This theory depicts that internationalisation enables the firms to reduce the cost from the transfer of goods and services beyond national boundaries and also to have an adequate control over the internal resources, which benefits in terms of organisational success in the domestic market. The stage model theory of internationalisation as discussed in the study of Wach and Wehrman (2014) also depicts that small firms' internationalization is directed from the motive of their growth and increase in the overall sales. But at the same time, Kalinic and Forza (2012) with a survey study over knowledge-intensive industries for their internationalization process identified that stage model theory is relevant for manufacturing firms only and it also fails to recognize that some firms focus on export more to increase their sales in compared to sales in domestic market. But in the context of Indian SMEs, from study of Javalgi et al, (2011) that conducted a cross-sectional survey study by getting 150 responses from Indian SMEs, it can be said that moderating effect of environmental uncertainty in Indian economy due to growing completion from SMEs and also from the large firms and entrepreneurs is one of the major factor that contributing in the growth of internationalisation of them. It is because the internationalisation of operations of SMEs makes them able to increase their overall competitiveness and performance effectiveness by reducing the level of competition. 

Furthermore, some observational studies are also being conducted to determine the factors influence internationalisation of SMEs (Le Nguyen and Kock; 2011; Li et al, 2011) and it has been found in these studies that financial crisis is another major factor to make the SMEs international. From this, it can be evaluated that internationalization process needs solid financial stability and financial crisis in an economy creates opportunities in the expansion and branding of SMEs in the new markets due to its capability to address the financial problems because of declining exchange rate and increasing government efforts for attracting foreign investment in easy terms. But at the same time, Doh and Kim (2014); Zarei et al, (2011) focus on the government support in terms of infrastructure development and environment of foreign markets for internationalization of SMEs. From this, it is evaluated that government support in terms of infrastructure building and maintenance is effective to increase the competency of SMEs in the domestic markets that increase their competency and also access to the resources, which leads them to go internationally. For example, Indian government undertaken number of initiatives for the growth of SMEs in India and also to increase the overall accessibility of them for resources, skills and other aspects, which makes them more competitive in the market and to get the benefits of this competitiveness, they focus towards the internationalization of their operations, so that overall revenue and market share can be improved (Narayan, 2016). 

Along with this, the diffusion and application of enabling technologies are also identified as the supportive factor for the internationalization of SMEs (D'Angelo, 2012). In this context, it is evaluated that internet is the major technological factor for the internationalization of SMEs. It is because this factor gives a low barrier entry to them in new markets along with approaching the customers and finalizing the deal with them adequately (D'Angelo, 2012). Similar to this, Kannabiran and Dharmalingam (2012) conducted a quantities study on Indian auto ancillaries to determine the role of technology in their internationalization. In the study, it has been found that through internet technologies, SMEs enable to interact with the people in their targeted foreign market and to gain an understanding for their needs and requirements, which enable them to determine the suitability of a market and to expand their business in that foreign market. In this context, it can be exemplified from Indian SMEs that technology evolution is one of the major factors to enhance overall capabilities of Indian SMEs as they are becoming more dynamic and able to access new markets, which can be seen from the rise of SMEs focused on B2B e-commerce (Narayan, 2018). It is because e-commerce technology is making the firms able to internationalize their products and services at less cost in compared to establishing a physical store.

Further, the studies on the basis of specific cases are also taken to investigate factors for internationalization of SMEs (D'Angelo et al, 2013; Laghzaoui, 2011). These studies were focused on the resource competence of SMEs by discussing that different SMEs have different competencies and resources, which is the key differentiator to influence their overall position in the international markets. It is because it enables SMEs to coordinate scarce resources and to make strategic decisions. Similar to this, with a resource-based view, Javalgi and Todd (2011) discussed firms with scarce and valuable resources generate a competitive advantage for the firms, which is also a base for the internationalization strategies of SMEs. It is because a firm gains better understanding and performance with its valuable and rare resources. In this context, it is identified from the research of Todd and Javalgi (2011) in the context of Indian SMEs that development and promotion of SMEs in India as policy aspect develops a competitive position of SMEs in the industry and it creates an opportunity for them to be internationalised.

But at the same time, network-based view defines the internationalization process of SMEs as a process of building a business network by them. In this context, it can be evaluated that the network structure of the firms influences their internationalization. It is because the business network of SMEs allows accessing more tangible and intangible resources, which support in the overall internationalization process of them (Hosseini and Dadfar, 2012). Further, in this context, with the consideration of international entrepreneurship theory, it can be depicted that rapid development of ICT and international logistics is developing a new business environment, which is facilitating opportunities for the young and small firms to enter in international markets. It is because ICT development is facilitating an increase in their ability to adapt the internationalization ability quickly and to get success in the new markets (Wach, 2015; Dimitratos et al, 2016). 

Overall, it can be depicted that the previous research studies are effective to develop a good understanding of the major factors that influence the overall internationalisation of SMEs.

2.3 Issues for SMEs in the Internationalisation process 

The research conducted with a survey of 250 manufacturing SMEs in Jordan by Al-Hyari et al, (2012) categorized the major challenges in economic/political-legal and governmental barriers, financial and information barriers. From this, it can be evaluated that the lack of information, financial sources and lack of governmental supports affect SMEs to frame an adequate market entry strategies and this becomes the reason for their failure in internationalization. This research is effective to determine the issues related to macro factors that affect the overall effectiveness of the internationalization process of SMEs. It is because due to limited resources, it is quite difficult for SMEs to address these barriers especially the financial and information access barriers that affect their overall internationalization strategy. While Todd and Javalgi (2007) categorized the challenges in terms of country-specific, industry-specific and firm-specific.

The country-specific challenges faced by SMEs are similar to the macro factors as identified in the study of Al-Hyari et al, (2012), while Todd and Javalgi, (2007) also discuss industry-specific and firm specific challenges that are the major barriers for the internationalization process of SMEs. From this, it can be evaluated that industry concentration in a country and level of differentiation creates major barriers for SMEs internationalization as it reduces their overall competency and ability to face the competition from large firms and to get a sufficient place and customer base. For example, Indian SMEs face the major challenge in their internationalization in terms of lack of infrastructure development and support to the firm in their home country and it affected their overall ability to adjust in the new environment and to compete for the existing firms significantly, which creates issues in the success of their internationalization process.

 Similar to firm specific challenges as discussed by Todd and Javalgi, (2007), Lee et al, (2012) also state that technological capabilities, access to international markets are some of the major issues that influence overall effectiveness of SMEs to go international. The international markets are more complex and different from the domestic markets and due to this; firms need to be more sound and resourceful for expanding their market internationally in a successful manner. Further, Kunday and Sengüler (2015) conducted a large study over 121975 people in 80 countries’ SMEs for identifying various issues and challenges and issues that they faced in their internationalization process. In the research, it has been found that the major issues that SMEs face needs to change their operations to work internationally and the lack of resources and skills to change as per the international market are the major issues that affect their internationalization strategies. In this context, it can be illustrated from Indian SMEs that the technological infrastructure in India is less developed in compared to other developed and emerging economies along with a huge difference in their operations. Due to this, they face difficulty to meet the needs of customers in the foreign market and create value for them that consequently becomes the reason for the failure of their internationalization process (Paul et al, 2017).

Furthermore, it is evaluated from the research of Cardoza and Fornes (2011) that lack of knowledge among SMEs for the opportunities is the major barriers in their successful internationalization. In this Uppsala model also depicts that opportunity knowledge is one of the most important elements for the firms to get accumulated in the international markets. For this, they need to build a borderless network, for which SMEs generally lack due to limited network, capacity, and resources. Similarly, the study of Yener et al, (2014) views by focusing on the information access as a major challenge faced by SMEs in their internationalization. It is evaluated from the research that SMEs face difficult to obtain the adequate level of information, which is necessary for reducing uncertainty in the international market and due to this, it works as the major deterrence against the rapid internationalization of SMEs. The longitudinal study of Fletcher and Prashantham (2011) also discussed that SMEs lacks with knowledge assimilation process that influences their overall effectiveness to understand the market and to gain the understanding of right target market that causes the failure of their internationalization process.  However, Toulova et al, (2015) with the consideration of resource based view depict that SMEs make strategies for internationalization on the basis of their scarce and rare resources that causes an increase in their overall networking and it contributes to identifying the market opportunities. Consequently, it helps to improve overall competitive advantage and success of the internationalization strategy of SMEs. Only those SMEs face issues, which have a lack of resources or resource based competencies. For example, Indian firms are generally perceived as the firms with lack of technology, producers of cheaper quality products and services etc due to lack of access to the resources in India. This perception influences their overall demand in the foreign market and it affects their overall success at international level.

There are various studies also conducted with a mix of qualitative and quantitative surveys to obtain more relevant findings for the major issues faced by SMEs in their internationalization process. In these studies, Singh et al, (2010) focused on the issues related to the financial strengths and capabilities of SMEs that affect their overall success sin the international market. It is because internationalization process needs sound financial stability and sources, while SMEs generally have limited financial capability, which affects their ability to have required working capital and finance to support financial needs n internationalization. It can also be explained from the study that lack of financial management capability, access to the financial resources, inadequate estimation of export expenses, risk of exchange rate volatility are some of the major issues that affect overall working capital and consequently financial support to the internationalization strategies of SMEs (Galati et al, 2014). Moreover, Korsakiene (2014) and Leick (2011) discuss the issues for SMEs to contact with the customers overseas. For this factor, it is evaluated from these studies that SMEs due to limited network face the issues in contact with the target market overseas. The difference in time zone, geographical distance, poor research by the firm for identifying the right target market and less access to the resources that list the potential customers are the major contributing factors for this issue that influence the overall international expansion of small firms. It is because it causes a lack of the required level of knowledge creates barriers to enter a market. In terms of Indian SMEs, the current policy and program initiatives by the Indian government for SMEs are contributing to increasing their access to financial resources, technological resources, and skills, but before this, the situation was quite worse. Due to this, it created a negative perception for Indian firms and affected their overall networking, which influences their international networking and also the process of internationalization.

Moreover, from a secondary literature review based study conducted by Narayanan (2015) also enabled to identify that major issues for SMEs in their internationalization strategy success are to find the right representative. Most of the SMEs depend upon or get engaged with the agents due to lack of resources that reduces their ability to develop their own controlled network in the foreign markets. For the right representative, it is essential to meet the behavioral, operational and structural requirements of SMEs, which are generally controlled by the large firms (Menzies, 2017). Due to this, SMEs face the issues in accessing a suitable distribution channel, developing trust with the agents and facilitate cooperation with an international network that reduces their overall success in the international regions (Venkatesh et al, 2015). Further, it can also be evaluated from the study of Pett and Wolff (2017) that inadequate quality of the products to meet international standards and untrained personnel also create issues in the internationalization strategies of SMEs. It is because due to less knowledge and experience, SMEs are characterized by incapable management, and lack of managerial expertise that reduces the resource utilization and management of human resources that reduces their overall competency to achieve a competitive advantage in the international markets. In this context, Rahman et al, (2017) discuss that focus of SMEs is one of the major strategies for their success of internationalization strategy. Due to this, they should consider an increase in their network of suppliers, distributors and other firms in the similar industry. It will be effective to increase their access to the market information and also to increase access and reach to the right target market that is a major indicator for the internationalization success of SMEs.

Overall, it can be said that Indian SMEs are also facing the challenges in their process of internationalization due to lack of access to the resources, demand in the international market, perception for lower quality in compared to their foreign counterparts etc. 

Literature Gap:

The above discussion is quite effective to gain an understanding of the major factors that are contributing to the rapid internationalisation of SMEs and also the major issues that are faced by SMEs in their internationalisation process. But at the same time, the major lacking of the above studies is the lack of consideration on Indian geographical location and also the lack of focus on the market entry strategy, which is the major determinant for the success of SMEs in the international market. Along with this, the existing researches also lack with the information for the reasons while some of SMEs are doing well enough that can be effective to improve strategies for Indian SMEs to be internationalised successfully. In order to achieve the research objectives and to gain a better understanding in the context of internationalisation of Indian SMEs, the further study is required to develop with a focus on strategies and challenges of Indian SMEs in their internationalisation process. 

Methodology 

Introduction

Research methodology defines the process of data collection, analysis and interpretation of the presentation of the data so that research objectives can be accomplished. This chapter is important to define approaches, methods, and strategies undertaken for the purpose of addressing the research problem. 

Research philosophy and approach 

Research philosophy is used for the purpose of determining the development of knowledge and its nature with the consideration of the research problem. The nature of knowledge can be subjective or objective in nature, which can be developed through interpretivism or positivism research philosophies respectively (Bailey, 2008). For this research purpose, interpretivism research philosophy has been chosen as it enables to gain an in-depth understanding of the internationalisation process of Indian SMEs. This philosophical methodology is suitable with the study as it assisted the researcher to interpret different elements of the study by getting the access of reality through social constructions such as language, shared meaning etc (Gill and Johnson, 2002). It increased the focus of the researcher on internationalisation process of Indian SMEs through direct experience, which improved overall understanding for major issues faced by Indian SMEs in their internationalisation process (McNabb, 2010). Positivism is not used as it is mainly for the purpose of developing generalise level of knowledge, while the research is specifically focused towards the Indian SMEs, which have quite different conditions from other country based SMEs and due to this; the findings cannot be generalised to a wider extent (Jonker and Pennink, 2010).

The research approach is the next step in methodology that exhibits the level at which the researcher is clear about the theory applicable to address the research problem. With the consideration of characteristics of inductive and deductive approaches, the inductive approach has been selected for this research that assisted to collect data and to analyse it in terms of developing a theory for the internationalisation process of Indian SMEs (Shay, 2008). This approach was suitable to collect a huge data and to gain a close understanding of the research context, which enabled to determine to understand for the major reasons of growing internationalisation of Indian SMEs and the major problems faced by them to ensure their success beyond national boundaries (Gray, 2013). This research approach also helped to collect qualitative data with the flexibility that improved the overall effectiveness of collected data to meet the research objectives (McNabb, 2010). 

Research purpose 

It is an important part of the research design that enables to know the major purpose of the study, which determines the direction for the collection and analysis of the data. As the research is to explore and critically evaluate the internationalisation process of Indian SMEs, this research is exploratory study, which seeks new insights for the current happenings (Marlow, 2010). It is useful for the studies that are required to understand a problem clearly in a precise manner. Due to this, the exploratory research purpose is suitable with this study as it enables to understand internationalisation process of SMEs in the new light to identify the motivational factors for and the major issues faced by Indian SMEs in their internationalisation (Maxfield and Babbie, 2014).

Research method

The method for a research depends upon the nature of knowledge required to be developed. The research methods can be qualitative, quantitative, or mix. Qualitative methods focus on textual information and assist to develop a detailed understanding, quantitative focuses on collecting and developing numerical results, while the mix is the combination of both methods (Bryman, 2007). For the purpose of this research, qualitative methods are used. It is because qualitative methods are suitable for the purpose of collecting the data with the in-depth and detailed investigation and to develop the findings in an adequate manner (Johnson and Christensen, 2010). The suitability of qualitative methods with the studies that are focused on the specific region and do not need to generalise the results makes it more suitable with the undertaken research problem. Quantitative methods are not chosen as these methods are helpful to collect numerical data and to generalise the results in numbers. The use of qualitative methods to conduct the research in a qualitative manner helped to gain a better understanding of the process and the major issues associated with the internationalisation of Indian SMEs (Lewis, 2015).

Data collection methods 

Data collection methods are also an important part of methodology as it depicts ability of the researcher to collect relevant and valid data for gaining an understanding for the research problem and to accomplish the research objectives (Shay, 2008). For the purpose of this research, the data can be collected from primary and secondary sources, which have different benefits for the research. Primary data is first hand data collected, which is not available and not collected before that provides the data specifically focused on research problem (Bailey, 2008). On the other hand, secondary data is the data, which has been collected already for another researcher for another purpose but can be used in the present research also to gain an understanding for research variables (Gray, 2013). 

For the collection of data, secondary methods are being used by conducting a literature review and analysing 2-3 case studies of Indian SMEs and their internationalisation by collecting the information from books, magazines, journals and other online sources. It is effective to develop an in-depth understanding by gaining real-world information that would improve results reliability and validity (Silverman, 2016). The secondary data has been chosen as it provided a lot of information from the different perspectives and over a long period of time, which not only brought diversity but also enabled the researcher to obtain the benefits of the longitudinal study. Although the difference in the time when secondary data has been collected and the time, when it is being used in present study created an issue of reliability, but the use of information sources from a long time period with the latest information reduced this limitation at a great extent (Maxfield and Babbie, 2014). 

For the purpose of collecting secondary data, the chosen databases were Emerald and Ebsco along with Google Scholar, which provided a wide range of secondary information available in the different forms, which improved ability of the researcher to collect a lot of information from different perspective and to critically evaluate the internationalisation process of Indian SMEs (Mooi and Sarstedt, 2011). These databases has been explored through the university portal (Ebsco, and Emerald) and also freely online (Google Scholar), which provided more reliable and authentic information for the major factors of motivation towards internationalisation and the also the issues faced by SMEs in their internationalisation process in general and also in the specific context of Indian SMEs (Denzin and Lincoln, 2011). The university portal also included some magazines, company reports etc, while Google included organisational, government and other authentic websites with a focus on the different factors, policies, programs that supports SMEs along with specific case details for identifying the problems faced Indian SMEs in their internationalisation process (McNabb, 2010).

These databases were used for different purposes as per the use of data collection methods. As for conducting a literature review and to develop a critical understanding for the research variables, the information for the theoretical and methodological contribution has been extracted from the databases in the context of SMEs, which helped to develop a general understanding for the major factors and issues in the internationalisation of SMEs (Engel and Schutt, 2012). On the other hand, the case study method has been used for the data collection in which, the researcher selected two Indian SMEs from the different sector and analysed their internationalisation process and for this, the information specific to the company for last 3-5 years have been collected. 

For the purpose of collecting more reliable and relevant information for the research purpose, the information has been collected for the factors that motivate to internationalise Indian SMEs and also the major issues (Jonker and Pennink, 2010). The understanding of these variables with the secondary research provided a detailed and critical understanding for the motivation behind internationalisation and also the major issues faced by the firms in their process of internationalisation (Gill and Johnson, 2002). Along with this, the case study method provided a rich understanding of real-life context and come to know the real factors and issues, which assisted to apply theoretical data for the undertaken research purpose (McNabb, 2010).

The case studies taken for the secondary research are selected with purposive sampling as these are being selected as per the ability of the researcher to access the data and information for the case studies along with their relevance with the research problem (Gray, 2013). It enables to obtain the case studies that are relevant to identify the major factors of internationalisation of Indian SMEs and also to determine the problems faced by them in the process and to get success at international level (Rubin et al, 2009). The use of purposive sampling for the selection of case studies also assisted to use authentic and reliable sources for data collection and to improve reliability and validity of the research results (Jonker and Pennink, 2010). 

The research has not been conducted with the use of primary data as it was not much relevant with the undertaken research problem due to focus in the critical evaluation of internationalisation process of Indian SMEs only (Mooi and Sarstedt, 2011). There a lot of secondary data available for different times and it is enough to mitigate the limitation related to not using primary data. Along with this, the empirical research in chapter two also depicts that there is the number of previous studies conducted either qualitatively or with secondary information that also makes the secondary data most suitable (Daymon and Holloway, 2010). The primary data could have been more time to consume that also caused a reason for not using this as a method of data collection in this research.

Data analysis

For the analysis of data collected from secondary sources i.e. case studies, a content analysis has been developed in which the data has been examined against the literature to determine how the case studies findings related with the previous findings (Flick, 2011). The content analysis enabled to examine and communicate the different trends and information of case studies companies to determine the major factors of their motivation and also the issues faced by them in their internationalisation process (Gratton and Jones, 2010). This method is most suitable to analyse secondary data and to develop qualitative findings to develop the detailed understanding of the collected information in an integrated manner.

Ethical Considerations 

Every research that includes either primary or secondary data has some ethical issues that are required to be considered for meeting the university guidelines for an ethical research. AS this research does not include primary data, only the ethical issues related to the use of secondary research are being considered. In this, all the information sources are being cited duly to avoid the issues of copyright violation. Further, it is also ensured that the information is written in own language without manipulating the actual meaning of the information, which also helped to eliminate the issues of plagiarism and also to meet the university ethical guidelines for an academic work. 

Summary 

It can be summarised from the above discussion of the chosen methodology that the research is being conducted qualitatively with the collection of a huge amount of secondary information. The use of secondary information is effective to increase overall understanding and to investigate the number of factors that are causing internationalisation and also the issues in the internationalisation of Indian SMEs with a focus on the real word context. Although the research is limited to secondary information, the use of the number of sources reduced this limitation. 

Findings and Discussion

This chapter is effective to present the findings obtained from the secondary research and then to discuss them in the context of research objective to identify the extent to which the research problem being addressed. The data is collected from the case studies of SMEs with the secondary information available and due to this, the findings are provided in the textual format.

Indian SME sector 

SME sector of India is the backbone of the economy as it contributes 45% of the industrial output, includes 40% of total export and also employs more than 60 million people in the economy along with creating 1.3 million jobs each year. SME sector of India also produces more than 8000 quality products in the Indian and international markets as there are approx 30 million SMEs in India with a growth rate of 8% per year (EISBC, 2018). SMEs are expanding their operations in international markets and due to their huge contribution in foreign reserves, and growth of the economy, Indian Government is also taking different measures, so that overall competitiveness of the SMEs can be enhanced in the international market. The government reforms include re-implementation of Public Procurement Policy, Pradhan Mantri MUDRA Yojna, Make in India, Start-up India, and Skill India (Narayan, 2018). Along with this, the growth of technology is also promoting the global development of Indian SMEs in the international market as the firms are findings some easy way to enter in the foreign market with less cost and risk of failure. The major internationalisation strategies, which are adopted by Indian SMEs for their global exposures are import/export, foreign direct investment and strategic alliances/joint ventures (Panizzolo et al, 2012). The below sub-sections are effective to identify the major internationalisation strategies of various SMEs of India:

Internationalisation of Indian SMEs

Brawn Biotech

Brawn Biotech is one of the growing SMES of India, which is engaged in marketing of medicinal and allied health products. The firm uses the supply from another unlisted firm rather than having its own manufacturing facility. It contributes the firm to improve its focus on the core business activities and to improve overall capabilities in the market, which is causing a growing concern of the firm for the international markets. Due to its growing capabilities and financial position in the local market, the firm is looking towards the potential of international markets with the use of dynamic and aggressive marketing strategies (Czinkota and Ronkainen, 2009). For increasing its recognition in the international market, the firm participating in various international pharma exhibitions, which are not only increasing organisational recognition in the international markets but also helps to penetrate into the different areas far and near. For entering the new markets, the firm holds product registration in many countries and work with other firms through the strategic alliance. The strategic alliance strategy for internationalisation is making the firm to enter in the foreign market with fewer resources and knowledge along with enhancing its overall recognition in the market.  The firm is making strategic alliances with the reputed firms in Europe and the African continent, Latin America, Asia and also in the Gulf Countries (Brawn Biotech, 2018). The strategic alliance enabled the firm to gain the knowledge of the market and to develop a growth in its overall market as the firm recently announced the opening of its office in South East Asia and South America. Along with this, in some markets, the firm also globalised its business operations with the export strategy that was easy for the firm with less risk and investment. It also enabled to develop a considerable goodwill in the export market. In order to ensure the growth in the foreign market and also the business sustainability, the firm is also involved in exploring the marketing agreements with the government, NGOs and also the private makers in the Asian and Latin countries (Brawn Biotech, 2018).

But at the same time, the firm faced the challenges related to higher competition in the pharmaceutical industry globally that affected its overall international exposure in many countries as the firm still has a negligible market share and reputation in some of the international markets. Along with this, the lack of technological advancement and less effective R&D also created issues for Brawn in their global expansion. It is because it affected their overall ability to meet the standards of potential strategic partners and due to this, the firm faced the issues of choosing right partners in some markets globally. Along with this, it is also found that Brawn sells its products in more than 60 countries worldwide, but China is not of them. It is because getting through Chinese FDA is one of the most critical roadblocks for the entry of Brawn in China market and its overall internationalisation strategy. Another barrier faced by Brawn in their global expansion is tariff barriers as for this, the firm needs to look towards the acceptance in the country to country. But, the cost effectiveness of the firm is one of the major factors that might open the door to other international markets also for the global expansion of the firm (CGTN, 2017). 

La Opala RG Limited 

La Opala is an Indian pure-play tableware company, which is engaged in manufacturing and marketing of life style products in tableware segment such as opal glass tableware. The wide range of opalware and the beauty of opal glass with quality increased its focus to expand the market beyond the national market. The firm started in 1988 and soon it started to make its presence in the international market with the use of exporting strategy (La Opala RG Ltd, 2017). The export strategy has been used since the firm was at the initial level and cannot bear a huge risk and cost. The exporting enabled the firm to reduce the overall cost and risk of the internationalisation as the first consignment of the firm leave the Indian Port in 1993. With its first export in 1993, the firm experienced a phenomenal growth in exports as in current; the firm is exporting in more than 30 countries around the globe including USA, UK, Spain, Italy, Middle East Countries etc. The major factor that influenced the firm to expand the business in the international market was less demand in Indian market initially, while there was a higher demand of opalware products in foreign markets (NDTV Profit, 2018). The lower income level and traditional life style of the people were the major reasons for a lower demand for Opalware products and due to this, the firm motivated to go into the international market. Along with this, the government policies in that year due to opening the boundary for globalisation along with quality products with wide range also caused the internationalisation of La Opala RG in 1993 (La Opala RG Ltd, 2017). 

But at the same time, in its export strategy, the firm faced the issues related to R&D, infrastructure, and change in the consumer needs and requirements with an increase in competition and globalisation. It is because the firm was equipped with limited financial resources and it affected the overall ability of the firm to meet the changing needs of consumers. Along with this, the firm also failed in Chinese market due to its higher cost in compared to Chinese manufacturers, which affected the overall expansion of the firm in the Chinese market (La Opala RG Ltd, 2017). 

Overall, it is also found that the major challenge for Indian SMEs in the global market is related to their survival. It is because they have to face the competition from MNCs, which are equipped with larger resources and network with better R&D and expertise, which creates severe competition for the SMEs and affects overall ability to survive (Knorringa and Nadvi, 2016). Another major issue that is faced by the SMEs in their globalisation is the demand of buyer's market, which keep changing and fluctuating with the change in the business environment in terms of competition, technology and globalisation (Paul et al, 2017). In the context of Indian SMEs, it can be said that non-standardised products, lack of marketing capabilities and poor brand image of the firms are the major issues that the SMEs face to get success in their internationalisation. Due to this, most of them prefer joint venture or strategic alliance as the major internationalisation strategy, which affects their overall value and recognition in the market as they work under the other brand name, which is already established in the market (Ashtankar, 2013). But in the current time of the growth of digitalisation, the firms are adopting aggressive marketing and promotion strategies by facilitating their participation in the global events, using digital media and social media, which are effective to improve their recognition in the foreign markets and also to develop a brand image among potential customers along with enhancing communication with them. Along with this, the government initiatives and the policies are also making SMEs more competitive along with enhancing their access to the resources and technologies (Karimi and Naghibi, 2015). It is because this support is beneficial for them to improve their standard of quality and to meet the needs of foreign customers. 

Discussion of Findings

The above case study analysis is effective to provide a good understanding of the major strategies and issues in the internationalisation of Indian SMEs. The understanding obtained from the case study findings are discussed below with the research objectives:

Major factors cause internationalisation of Indian SMEs

From the case study findings, it can be discussed that the current policies of Indian government to provide support to SMEs in terms of increasing access of the firms for the advanced technology, financial support in terms of easy loan facilities and also the development of required skill and support for the start-ups are the major aspects, which are motivating SMEs to go global. It is because the increase in the access of resources and the skills are contributing to improve the overall competitiveness and capabilities of SMEs to face the competition in the foreign markets and also to meet the needs and requirements of the customers from the international markets. The growing support of the government for start-ups and digitalisation is benefiting SMEs to develop their overall capabilities and also to gain the knowledge for the international markets. From this, it can be explained that it provides them with a structure for the development of better products, which meet the needs of foreign markets and it assists in the overall internationalisation of the firm. The above interpreted findings are in the line of the studies of Doh and Kim (2014); Zarei et al, (2011); Narayan (2016), which also depicted the government support as one of the major factors for growing internationalisation of SMEs. Although the findings are quite different from the research studies of Le Nguyen and Kock; (2011); Li et al, (2011), which discussed that financial crisis in the economy leads the internationalization of SMEs. It is because the financial crisis will also affect the financial position of SMEs and consequently their ability to be competitive in the international market.

Further, it can be discussed from the findings that digitalization and evolution of the internet technology are also contributing in the internationalization of SMEs as they are making their entry in the foreign markets in an easy way along with developing their overall understanding for the needs and expectations of the target market and also the strategies of competitors. From this, it can be explained that digital and internet technologies have become a way for Indian SMEs to develop their recognition in the new markets and also to create demand for their products by making them aware for the associated values and characteristics of the products, which increase their overall international demand and consequently it causes their internationalization. Further, it can also be analyzed from findings that the quality and cost effectiveness of SMEs are also effective to make them motivated towards internationalization. It is because these characteristics of the firms create a competitive advantage for them that they need to capitalize on the international market with their expansion. In this, it can be explained that the quality and cost effectiveness of Indian SMEs make them competitive in the domestic market and also create an opportunity for them to expand their business in the international market. The above findings can be supported by the studies of Bell et al, (2004); Todd and Javalgi (2007) and Crick and Spence (2005) and also the resource based view as cited in the studies of D'Angelo et al, (2013); Laghzaoui, (2011) and Javalgi and Todd (2011). It is because, in these studies, it has been discussed that firm specific advantages and the technologies are becoming the major factors of internationalization of SMEs. Due to these factors, they are finding the partners and customer in the international markets, which is creating demand for their products and consequently their ability to internationalize their operations.

Further, from the case study findings, it can also be discussed that the less demand in the local market along with the capability of the firm to produce quality products also makes them motivated for the internationalisation. It is because the income level of Indian people is less in compared to foreign markets and due to this, the SMEs with premium pricing products might face the issues of higher demand in the local market. Due to this, they focus on exporting or the strategic alliance strategies to enter in the foreign market to cater foreign customer needs and to get economies of scale along with an increase in overall demand, which ensures their sustainability and growth. This finding is in line with traditional internationalisation theory as cited in the studies of Wach and Wehrman (2014); Kalinic and Forza (2012) and Javalgi et al, (2011) as these studies also discussed that economic uncertainty in an economy and ability of the firm to develop competitive advantage in foreign market due to quality and capabilities are the major factors for the internationalisation of SMEs.

Overall, it can be said that government support, technology growth, less demand in the local market, and the firm specific capabilities and advantages are the major factors for internationalisation of Indian SMEs.

Major Issues faced by Indian SMEs while expanding internationally 

In the context of this objective, it can be found that the major issues that are faced by the Indian SMEs in their internationalisation process are the lack of information and competitiveness of them in the international market along with higher tariffs. SMEs face a huge competition from the local firms as well as from MNCs in the international markets, which are equipped with better resources, expertise and market share with proper recognition and reputation in the market. In this, it can be explained that poor brand image of Indian SMEs influence their overall ability to get a recognition and demand in the foreign markets and due to this, they use strategic alliance or joint venture strategies for their internationalisation. It affects their overall profitability and further growth potential due to less control over the strategies and operations to improve customer base and demand in the foreign market. These findings are in line with the studies of Al-Hyari et al, (2012), Todd and Javalgi, (2007) as these studies also discussed the country specific and industry specific factors such as technology development in the country, competition, standardization required as the major barriers for the internationalization of Indian SMEs in the international market. The findings further can also be supported with the study of Kunday and Sengüler (2015) as it has been discussed in the study that Indian SMEs do not have the required competency and resources to face the competition from the foreign larger players and it eliminates their overall success in the international market.

Further, it can also be analyzed from the case study findings that firm specific aspects are also the major issues that are faced by Indian SMEs while expanding globally. In this context, it can be said that SMEs have less technology advancement and access and also has little R&D facilities, which affects their overall innovation and creativity to create value for the products and to meet the growing or evolving needs of the customers. Along with this, poor marketing capabilities and lack of required standard in the product quality to meet the foreign standards also influence the overall demand of SMEs in the foreign market and it carets issues for them to expand their operations internationally in a successful manner. Along with this, it can also be discussed from findings that due to limited resources and small size, SMEs are not much effective to gain the knowledge of the market and customers in the international market accurately and it affects their overall choice for the strategic partners for entering in the foreign market. It also affects their ability to develop the network of suppliers, distributors, and customers, which is essential for the success of a firm in the international market. Another major issue that has been identified in the success of international expansion of Indian SMEs is the availability of their resources. It is because the limited and scarce resources enable them to choose either exporting or the strategic alliance strategy in the foreign market, which influence their overall exposure and future success in the global market. These findings can be supported by the number of studies such as Yener et al, (2014); Cardoza and Fornes (2011); Fletcher and Prashantham (2011) and Toulova et al, (2015) as with a resource base view, knowledge assimilation, and networking approach, these studies found that SMEs lack with the required resources and it affects their overall strategy for the internationalization of their business and consequently their overall networking in the global market. Due to this, these create barriers to the international expansion of SMEs.

But at the same time, in the current, the increasing use of digital technologies by Indian SMEs and adoption of aggressive marketing strategies are beneficial for the firms to increase their overall recognition and reputation in the international markets, which are contributing towards the success of Indian SMEs in the international market. The given case studies also depict that there is growing concern of Indian SMEs on product quality and also the marketing strategies, which benefits in terms of making a sustainable and competitive position in the international market to get the required level of success. This finding is quite different from the studies of Pett and Wolff (2017); Venkatesh et al, (2015) that stated that lack of skill and quality as the major barriers and issues faced by Indian SMEs in their internationalisation. 

Overall, it can be said that government regulations, competition, quality, standardisation, right partner choice, resource access, networking, knowledge of the market are some of the major issues in the internationalisation of Indian SMEs. The above findings are effective to develop a good understanding of the major factors and issues in the internationalisation of SMEs, which are concluded in the next chapter.

Conclusions, and Recommendations 

It is the last chapter of the study that concludes the major findings obtained from the secondary research along with providing recommendations. After this, the research implications and the scope for future research are proposed in the light of research limitations.

Conclusions 

In the conclusion of first objective i.e. to evaluate the major factors that motivate Indian SMEs to go international, it can be concluded that in present time, the growth of technology and the government support and policies are the major factors that motivate Indian SMEs for internationalisation. It is because these factors are effective to increase their access to the new technology, financial resources, and also developing the required skill and expertise level, which is contributing to increasing their competitiveness and also the ability to meet the level of competition in the foreign market. Along with this, it can also be concluded that firm specific capabilities and advantages in terms of unique products, quality products, less demand in the local market due to higher pricing are some of the major factors that also motivate the firms to go international. It is because, through this, they enable to face the competition and also to cater to the advanced needs of the customers in the foreign market. The firm specific advantage also includes less cost of production, which is also beneficial to develop a competitive advantage for the firm and it motivates them to capitalise this advantage in the foreign market. The less demand in the local market is for SMEs, which product higher priced products with some unique features, which are highly demanded in the foreign markets and it motivates Indian SMEs to go international.

The second objective i.e. to identify the major challenges faced by Indian SMEs in their globalisation, it can be concluded that the major issue for the Indian SMEs is the poor image in the global market for the quality, lack of marketing capabilities and less access to the resources and supply network by the SMEs in the foreign markets. SMEs have limited resources and due to this, it influences their overall competitiveness in the international market against the MNCs and other players in the industry. Along with this, the growing competition due to globalisation and use of technology also creates a major barrier in their overall success in international boundaries. Further, it can also be concluded that knowledge of the market and issues in the selection of the right partners also create issues for Indian SMEs in the process of their expansion in the international market. It is because it affects their overall ability to access more resources, develop their recognition and also the network, which creates issues for them to face the growing level of competition and also to meet the needs of customers in new markets.

Recommendations 

Although it can also be concluded that the growing concern of the firms on marketing practices and use of digital technologies are making them recognised and able to develop a larger customer base in the foreign markets. Consequently, it is contributing to the overall success of the SMEs in the international markets. So it can be recommended that Indian SMEs should focus on more effective marketing strategies such as participation in the foreign events related to their products and industry along with utilising digital technologies and social media to interact with foreign customers. It will be effective to improve overall recognition and reputation of the firm and will further assist to develop a customer base for getting success in the foreign market. 

Research Implications

The research results have implication for the government and also for the firms in terms of improving their policy and strategy making practices. The government officials can use this research to identify the major issues faced by SMEs and to develop the policies to eliminate those issues so that growth of SMEs can be ensured. Along with this, SMEs can also use the research results to develop their marketing strategies for getting success in the international markets along with changing their overall structure and strategies in the foreign market as per their needs and requirements rather than using the same as being used in the Indian market.

Research Limitation and Future Study 

The major limitation of the study is that it is completely based on the secondary findings, while the change in the environment might be the reason for the new issues and challenges for SMEs in their internationalisation. Along with this, the changing global and technological environment along with growing government support for SMEs is also making the firms more competitive and effective to face the competition in foreign markets and facilitating their overall success. So, the further research can be undertaken with the use of primary research further along with identifying the change in the structure and strategies of firms over the period to determine the internationalisation of Indian SMEs. It will be effective to improve overall contribution in literature.

Related :-

Q National Registry of Emergency Medical Technicians-Accrediting Agency This research paper emphasis on the national registry of emergency medical technicians to apply one's critical thinking on the selected topic.

Q Hotel recommendation based on Hybrid Model the objective of this paper is to design a hotel recommender system using hybrid model.it aims to suggest items that are liked by users.

Q France’s Famously Crusty Baguette goes soft paper on france’s famously crusty baguette goes soft, changing customer preference over target marketing